This is part of my universe, I post these levels on daily basis so as to give the new trends developing. Now what more can we do we were so right on Composite- Rut led rally. In my opinion and also my bosom buddy Raj Bakshi a.k.a Ray a close aboe 1080 is a great signal, and you will find 1080, 1680 360 all synchronised very nicely, moving in tandem, breaking overhead reistances as scripted.. One point someone has raised and Abby also highlighted it today that how come you are so good in a market moving up and not so good in a market moving down, I trade every day although Abby ducked the question and said we are not astrologists I think I who trade strictly on big picture model get really frustrated as fundamentals are intact, like my capacity utilisation or Industrial production or consumer confidence or NAPM number or ECI or hourly earnings none of this indicates a deflationary scenario, now the people who look at charts on five minutes basis see flattening of the curve but I as a fundamentalist do not see the reasons of that flattening of the curve, the market was pricing itself for close outs and we were not able to find that missing link of close out evidence of close out. Now what happens more than often people who are fresh make this big error of going with current sentiment, they get influenced by noise around them. Imagine if I would be a bear last two week and a bull now I would like to call myself a cheat because chart induced deflation was so apparent it was just not there in macro economic numbers.
Consistent approach sometime can be painful, but here is what i have developed what I call trend is your friend, if market takes out key supports invariably we test lower supports which are former resistances on that basis I traded my way down all the way to 1320 on composite and remaining a bull without changing the position that this is a begining of a bear market. For someone like me with only asset of integrity I could not afford to do a accompora with the market.
Financial bubble economy is a new challenge, the flight of capital and assumption of $ as new scarce commodity has put several new strains on business of projections, we need that inter-relational broad view to see how the domino is going to fall, if you look back at my posts soon after intervention I wrote that first threat to global finacial system is lifted and I also highlighted that this is a concerted action with a nod from OECD, the purpose was to get the 93000 short contracts expiring that Monday expire worthless, the doulbe game was stopped. Once that was handled, Russian situation started to stabilise, now bonds sellers and Yen sellers after seeing that HK is now stable moved to cover their bond and Yen shorts, since their are no free lunches in global markets they were taken to launderers, the chart induced deflation is now looking distant to the same experts. The fact remains that story has to be fully known and fully told.
These interest rate cuts and some more to come I have pointed it out much before that we need these cuts as we have very high real rates, It induced reforms and new paradigm is a new reality, in this interest rates are being cut although unemployment remains high, AG knows like any expert that leveraged liquidity played an important role in global market that has almost dried, the banks need to cover for their losses on bail out of LTC and soft money needs to be made available to ASEA, now lower $ has taken off pressures on ASEA, the lower interest rates will help these highly indebted country, rupee trading at 14000 is now almost up to 7000 level, this is power of Fed, leveraged liquidity the dangerous kind of liquidity is now repalaced by easy money, the banks can borrow soon short money and lend at the longer end of the yield curve the deflationary curve of smart money will soon become a normal looking curve, for that to happen one more thing has to fall in place, what is that if AG wants normal looking 200 basis point differential curve he would like to see the yields at the long end heading up, my next prediction is that Nov and next few rate cuts will still be made if market shows good strength, AG knows fully that how much leveraged has left, he also wants to reward the kind bankers who took up the call on day of reckoning and agreed to bail out LTC, so we will have strange picture here unemployment may still be higher in next few months, ECI may show no sign of abatement but rate cuts will still come, the normal looking yild curve with a 200 point differential is the aim, that is how the global liquidity lost in thin air will be created..Fwiw |
